Should you invest in gold or silver?
Despite the uncertainty and challenging times this year because of COVID-19, many investors flocked to defensive assets such as silver and gold.
This has paid off handsomely, particularly given that the All Ordinaries Index is down over 10 per cent.
Since 1 January 2020, gold is up around 24 per cent while silver has performed even better, as it is up over 40 per cent for the year.
While these figures indicate that these were great investments this year, you cannot compare an index of stocks, such as the All Ordinaries Index against a single commodity.
This is because there were three stocks in the ASX top 100 that performed better than gold and silver, which include Evolution Mining (ASX: EVM), which is currently up 62 per cent, while Fortescue Metals Group (ASX: FMG) and Domino’s Pizza (ASX:DMP) are both up over 50 per cent.
In addition, six stocks are up over 20 per cent for the year, but the challenge for investors is identifying those stocks that are likely to perform well.
So is gold and silver a good investment right now and where are these commodities heading in in the last quarter of 2020 and into 2021?
Gold and silver are very safe, long-term investments; in fact, when it comes to gold, the long-term trend shows that it grows at an average rate of around 10 per cent per annum.
That said, these assets have an inverse correlation to world markets. In other words, if the stock market is rising, gold and silver are generally flat or down. Therefore, if you decide to invest you need to expect there will be years of limited to no growth.
So where are gold and silver heading in the next year?
Both will continue to rise until mid-next year but before you get too excited, most of their current run is over, so the growth will most likely be around 10 per cent or possibly a little more. That said, if the stock market falls heavily again, anything is possible.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au.
Short-term positions in small, early stage ASX companies,
with high potential and near term price catalysts.
Focusing on resource exploration, early-stage tech, and biotech.
Exceptional opportunities across a broad range of
early-stage growth sectors with strong management.
Seeking 1,000% plus returns across medium to long-term holds.
Longer-term positions in a variety of sectors.
Seeking strong management where traction is established and have entered into a growth phase.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.